Anti‐dumping: A Growing Problem in International Trade

This paper discusses the issue of anti‐dumping (AD) proliferation. AD is used more frequently, by more countries, and against more products than ever in its history. I review AD filing patterns with an emphasis on the scope of countries and industries seeking protection. Recent trends suggest that the widespread embrace of AD protection makes the prospect for AD reform increasingly unlikely. AD is no longer being used solely by high‐income developed countries. It is increasingly being used by middle‐income and even lower‐income countries. New users have chosen to use AD very intensively. Per dollar of imports the new users have filed AD cases up to 15–20 times more frequently than the traditional AD users such as the US and EU. The evolving set of AD users complicates AD negotiations. In the near term, strong opposition by the US and EU makes reform a highly unlikely outcome. In the longer run, rising use of AD against the US and EU could conceivably weaken their support for AD; yet, the same trends that might finally cause the US and EU to realise AD is a failed policy will likely make reform impossible.     

The economic and strategic motives for antidumping filings

The Economic and Strategic Motives for Antidumping Filings. — This paper looks at worldwide antidumping activity during the last two decades. We examine the motives for AD filings by countries in an attempt to identify whether economic or strategic concerns are driving the recent upsurge in AD use. We begin by providing a comprehensive overview of the data on cases initiated in the 1980–1998 period. We then use nonparametric methods to identify motivations for the use of antidumping and find considerable support for strategic motivations. This suggests that the rise in AD activity cannot be solely explained by an increase in unfair trading practices.     

East Asia's Anti‐dumping Problem

East Asia accounts for a large and growing share of worldwide anti‐dumping (AD) activity. East Asian countries have long been the main targets of AD actions, accounting for about one‐third of all AD actions during the 1980s, more than 40 per cent of all AD actions during the 1990s, and almost 50 per cent of all AD actions in recent years. After controlling for factors that might influence filings such as the exchange rate and trade volume, it is found that East Asian countries are subject to about twice as many cases as either North American or Western European countries. Moreover, the trend in filings against East Asian countries is increasing, meaning that in recent years the propensity for countries to direct their AD filings against East Asian countries is growing. One concern is that the growing intensity of AD use against East Asia is driven by China‐PRC. Importantly, but a rising propensity is found even excluding China‐PRC.     

WTO Exceptions as Insurance

The paper formalizes the notion that GATT exceptions such as antidumping and escape clause actions can act as insurance for import competing sectors affected by adverse price shocks. The authors use a general‐equilibrium model with several import competing sectors and assume incomplete markets so that agents cannot contract insurance. It is shown that sector‐specific contingent protection measures are superior to uniform contingent tariffs as an insurance mechanism. A tax‐cum‐subsidy policy (i.e., taxing all sectors in order to subsidize the shocked sector) also improves welfare and is superior to contingent protection.     

Product differentiation and duration of US import trade

We examine the extent to which product differentiation affects duration of US import trade relationships. The results are consistent with a matching model of trade formation. Using highly disaggregated product level data we estimate the hazard rate is at least 23% higher for homogeneous goods than for differentiated products. The results are not only highly robust but are often strengthened under alternative specifications. As the smallest relationships are dropped, differences across product types increase. Controlling for potential measurement errors also results in larger differences across product types.     

The Economics and Politics of Trade Policy: An Empirical Analysis of ITC Decision Making

The paper studies the determinants of trade policy decisions, focusing specifically on antidumping and countervailing duty statutes administered by the International Trade Commission (ITC). Using detailed industry, import, and political pressure data, ITC decision making is modeled, weighing the relative impact of economic and political factors in predicting policy outcomes. It is found that the ITC's decision making is significantly influenced by both economic and political factors. However, because an industry has much greater ability to create political pressure than induce economic injury, the results highlight the strategic importance of oversight representation and PAC contributions in an industry's bid for protection.     

Dumping And Double Crossing: The (In)Effectiveness Of Cost‐Based Trade Policy Under Incomplete Information*

We argue that the rise of antidumping protection and the proliferation of voluntary export restraints (VERs) are fundamentally interrelated. We show that both can be explained by a cost‐based definition of dumping when the domestic government has incomplete information about the foreign firm's costs. Given that its costs are only imperfectly observed and knowing the government's incentives to protect, efficient foreign firms will voluntarily restrain their exports prior to the antidumping investigation. In turn, the VER distorts the government's perception of the foreign firm's efficiency and leads to undesirably high duties regardless of the foreign firm's efficiency.     

Ins, outs, and the duration of trade

Abstract.  We employ survival analysis to study the duration of U.S. imports. Our findings indicate international trade is far more dynamic than previously thought. The median duration of exporting a product to the U.S. is very short, on the order of two to four years. There is negative duration dependence. If a country is able to survive in the exporting market for the first few years it will face a very small probability of failure and will likely export the product for a long period of time. The results hold across countries and industries and are robust to aggregation. JEL classification: F14, F19, C14, C41     

The Cost of Antidumping: the Devil is in the Details

We argue that the costs of antidumping (AD) protection are substantially higher than standard tariff analysis would suggest. First, since AD duties are often adjusted during administrative reviews, the welfare cost of AD duties increases over time. These adjustments effectively transfer heavily distorted AD revenue to foreign firms. Second, AD duties are more costly than simply the visible costs of AD protection. There are significant additional costs associated with the prospect of protection imposed when foreign and domestic firms alter their profit maximizing behavior in order to influence the outcome of potential AD investigations. These costs may exceed the direct cost of AD duties.